Hospitality Properties Trust (HPT, Financial) filed Quarterly Report for the period ended 2010-06-30.
Hospitality Properties Trust has a market cap of $2.57 billion; its shares were traded at around $20.82 with a P/E ratio of 6.53 and P/S ratio of 2.48. The dividend yield of Hospitality Properties Trust stocks is 8.65%. Hospitality Properties Trust had an annual average earning growth of 2.2% over the past 10 years.HPT is in the portfolios of David Dreman of Dreman Value Management, Richard Pzena of Pzena Investment Management LLC, Jeremy Grantham of GMO LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors.
We have no employees. Instead, services that might be provided to us by employees are provided to us by RMR. RMR provides both business and property management services to us under a business management agreement and a property management agreement, each as amended in January 2010. In connection with these agreements with RMR, we recognized expenses of $8,258 and $16,408, and $8,219 and $16,307 for the three and six months ended June 30, 2010 and 2009, respectively. These amounts are included in general and administrative expenses in our condensed consolidated financial statements.
As of June 30, 2010, we have invested approximately $5,177 in Affiliates Insurance, an Indiana licensed insurance company organized by RMR and other companies to which RMR provides management services. We own 14.29% of Affiliates Insurance. All of our trustees are also directors of Affiliates Insurance and RMR provides certain management services to Affiliates Insurance. During the three and six months ended June 30, 2010, we recognized a loss of $24 and $52, respectively, related to this investment. In June 2010, we, RMR and other companies to which RMR provides management services purchased property insurance pursuant to an insurance program arranged by Affiliates Insurance. Our annual premiums for this property insurance are expected to be approximately $4,816. We are currently investigating the possibilities to expand our insurance relationships with Affiliates Insurance.
Except as described in note 2 to the table above, no principal repayments are due under these notes until maturity. Because these notes bear interest at fixed rates, changes in market interest rates during the term of these debts will not affect our operating results. However, if at maturity these notes were refinanced at interest rates which are 10% higher than the rates shown above, our per annum interest cost would increase by approximately $12,946. Changes in market interest rates also affect the fair value of our debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at June 30, 2010, and discounted cash flow analyses, a hypothetical immediate 10% change in interest rates would change the fair value of our fixed rate debt obligations by approximately $43,623. Change in the trading price of our common shares may also affect the fair value of our convertible senior notes.
At June 30, 2010, we had one mortgage note secured by one hotel, with a principal balance of $3,429 and a fixed interest rate of 8.3% that matures on July 1, 2011. This note, which requires monthly principal and interest payments of $32 through maturity pursuant to an amortization schedule, is expected to have a principal balance of $3,326 at maturity and contains a provision that allows us to make repayment at a premium to face value.
During the six months ended June 30, 2010, the payments we received under our management contract with Marriott for 34 hotels that requires minimum annual payments to us of approximately $44.2 million (which we have historically referred to as our Marriott No. 3 contract) and under our lease with Crestline for 19 hotels managed by Marriott that requires minimum annual rent payments to us of approximately $28.5 million (which we have historically referred to as our Marriott No. 4 contract) were $8.9 million and $5.6 million, respectively, less than the minimum amounts contractually required. We applied the available security deposits to cover these deficiencies. Also, during the period between June 30, 2010 and August 8, 2010, we received payments for the Marriott No. 3 and Marriott No. 4 contracts which were less than the contractual minimums required by $0.5 million and $0.9 million, respectively, and we applied the security deposits we hold to cover these amounts. At August 8, 2010, the remaining balances of the security deposits which we hold for the Marriott No. 3 and Marriott No. 4 contracts were $17.6 million and $13.5 million, respectively.
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Hospitality Properties Trust has a market cap of $2.57 billion; its shares were traded at around $20.82 with a P/E ratio of 6.53 and P/S ratio of 2.48. The dividend yield of Hospitality Properties Trust stocks is 8.65%. Hospitality Properties Trust had an annual average earning growth of 2.2% over the past 10 years.HPT is in the portfolios of David Dreman of Dreman Value Management, Richard Pzena of Pzena Investment Management LLC, Jeremy Grantham of GMO LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
As noted above, TA is our largest tenant. TA is our former subsidiary and we are its largest shareholder. RMR provides management services to both us and TA. We lease our 185 travel centers to TA under two lease agreements, which we refer to as our TA No. 1 and TA No. 2 agreements. See the table on page 28 for more information about the terms of these agreements. We recognized rental income of $47,365 and $93,937 for the three and six months ended June 30, 2010, respectively, and $42,550 and $84,749 for the three and six months ended June 30, 2009, respectively, under our lease agreements with TA.We have no employees. Instead, services that might be provided to us by employees are provided to us by RMR. RMR provides both business and property management services to us under a business management agreement and a property management agreement, each as amended in January 2010. In connection with these agreements with RMR, we recognized expenses of $8,258 and $16,408, and $8,219 and $16,307 for the three and six months ended June 30, 2010 and 2009, respectively. These amounts are included in general and administrative expenses in our condensed consolidated financial statements.
As of June 30, 2010, we have invested approximately $5,177 in Affiliates Insurance, an Indiana licensed insurance company organized by RMR and other companies to which RMR provides management services. We own 14.29% of Affiliates Insurance. All of our trustees are also directors of Affiliates Insurance and RMR provides certain management services to Affiliates Insurance. During the three and six months ended June 30, 2010, we recognized a loss of $24 and $52, respectively, related to this investment. In June 2010, we, RMR and other companies to which RMR provides management services purchased property insurance pursuant to an insurance program arranged by Affiliates Insurance. Our annual premiums for this property insurance are expected to be approximately $4,816. We are currently investigating the possibilities to expand our insurance relationships with Affiliates Insurance.
Except as described in note 2 to the table above, no principal repayments are due under these notes until maturity. Because these notes bear interest at fixed rates, changes in market interest rates during the term of these debts will not affect our operating results. However, if at maturity these notes were refinanced at interest rates which are 10% higher than the rates shown above, our per annum interest cost would increase by approximately $12,946. Changes in market interest rates also affect the fair value of our debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at June 30, 2010, and discounted cash flow analyses, a hypothetical immediate 10% change in interest rates would change the fair value of our fixed rate debt obligations by approximately $43,623. Change in the trading price of our common shares may also affect the fair value of our convertible senior notes.
At June 30, 2010, we had one mortgage note secured by one hotel, with a principal balance of $3,429 and a fixed interest rate of 8.3% that matures on July 1, 2011. This note, which requires monthly principal and interest payments of $32 through maturity pursuant to an amortization schedule, is expected to have a principal balance of $3,326 at maturity and contains a provision that allows us to make repayment at a premium to face value.
During the six months ended June 30, 2010, the payments we received under our management contract with Marriott for 34 hotels that requires minimum annual payments to us of approximately $44.2 million (which we have historically referred to as our Marriott No. 3 contract) and under our lease with Crestline for 19 hotels managed by Marriott that requires minimum annual rent payments to us of approximately $28.5 million (which we have historically referred to as our Marriott No. 4 contract) were $8.9 million and $5.6 million, respectively, less than the minimum amounts contractually required. We applied the available security deposits to cover these deficiencies. Also, during the period between June 30, 2010 and August 8, 2010, we received payments for the Marriott No. 3 and Marriott No. 4 contracts which were less than the contractual minimums required by $0.5 million and $0.9 million, respectively, and we applied the security deposits we hold to cover these amounts. At August 8, 2010, the remaining balances of the security deposits which we hold for the Marriott No. 3 and Marriott No. 4 contracts were $17.6 million and $13.5 million, respectively.
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